Soybean futures soar as supply side issues dominate market

South America faces torrid weather

CHICAGO SOYBEAN FUTURES JUMPED TO A FOURTH WEEK LY GAIN, UNDER PINNED BY REPORTS of severe drought which hindered production in South America, particularly Brazil and Argentina, two major producers and suppliers of the soft commodity.

According to market reports, the most-active soybean contract on the Chicago Board of Trade (CBOT) gained 15 percent in four weeks of rally to trade up 0.3 percent to $15.78-3/4 a bushel.

Market dealers noted that it is mainly supply side issues that are dominating the soybean market, adding that the market is looking at lower supplies, even as demand remains high.It was also observed that soybeans rose after Brazilian food supply and statistics agency, Conab, slashed its estimate of Brazil’s soybean crop to 125.471 million tonnes, down from its previous estimate of 140.5 million, a figure way below the U.S. Department of Agriculture’s (USDA) forecast of 134 million, released a day earlier.

Argentina’s Rosario grains exchange further noted that dry weather in recent weeks and scant hopes of significant rains for the rest of the month in Argentina’s soybean belt are igniting fears of a “productive disaster” akin to what was experienced in 2018.

On the other hand, wheat dropped for a second session, while corn eased at the close of trading activities, but both grains recorded weekly gains as wheat rose one percent, while corn was up three percent.